There are some complaints about image upload in the latest and greatest WordPress. In the Support forum one claims that big images doesn’t produce thumbnails, another that the path of the uploaded image is not correct, as if the blog has to be in the documetnt root.

It worked as expected. Selecting the link and use thumbnail options works well. IfÂ you don’t use the options, it is possible to drag the thumbnail image into place in the editor.Â IfÂ you use the options, however, it is no longer possible to drag the thumbnail and you have to use “Send to editor”. It’s a bit strange, but this is how it works for now.